Mortgage Tips, Advice & Articles.

Keep up to date with the latest Australian property market and finance news.

How prepared are you for an interest rate rise?

The RBA has again chosen to leave the cash rate on hold for a staggering 15 consecutive months, in spite of investors driving demand for home loans to record highs – though signs of a weakening property market are present which will be a challenge in the near term says Glenn Stevens, Governor of the RBA. This is good news for people seeking a mortgage or making home loan repayments. But many believe that the only way for interest rates to move is up.

The Reserve Bank of Australia has expressed concern over the increasing level of household debt relative to income. The RBA says that Australians should be aware that wages are behind increasing costs and gave a reminder that interest rates will inevitably rise. The warning highlights the importance of adding in some ‘wriggle room’ when calculating home loan repayments. The RBA pointed to NSW and Victoria as the areas where the payments to service mortgage debt is close to historical highs, due to the fast growth of house prices in those states.

So how prepared are you for an interest rate rise?

In a recent survey more than half of mortgage holders have no plan in place for how they will cope with interest rate rises.

It’s impossible to know exactly when a rate rise will happen. A rise could be as gradual and as a quarter percent each time, or there could be larger half or full percentage point increases. Either way, the changes will affect anyone with a mortgage.

But there are ways to get ready.

Find out how much an interest rate rise will cost you

It’s worth looking at what the changes would mean to your interest rate and mortgage payment. You can use our home loan repayment calculator to work these figures out. Enter how much your original loan amount was and your original term. Then increase the interest rate by .25% .5% and even 1%. You’ll see the amount you’d pay each month.

See how much you can afford

A budget will show what money you have coming in, what money is going out, and most importantly, how much you have left at the end. Our budget planner tool will help you do all of this.
If increased mortgage payments mean you go from managing ok to struggling to get by, use the budget to look for areas you can cut back. Are you spending a big amount each month on travel? Do you think you can spend less when out shopping?

Explore a new mortgage deal

It’s worth looking into refinancing your mortgage to see if you can take advantage of current rates. For certainty you could lock into a fixed rate. If your fixed rate is coming to an end, the earlier you prepare the better. Speak to your lender or us :-) to make sure you more to there best rate not there standard rate. You may need to move lenders to get the best deal. If your home value has increased, it may mean you have increased equity and this could be used as a buffer if times get tough.

Get Pre-qualified

Subscribe to be the first to know about new rates, property and the latest news.

Po Box 756, Runaway Bay, QLD, 4216

About Access One

Access One is changing the way Australians buy mortgages by being more informed. We’re an award winning mortgage broker that combines technology and 19 years of experience to find you the lowest total cost home loans.

Award Winning Mortgage Broker

Access One is currently one of the longest running brokers for the AFG network being inducted into the hall of fame in 2011.